Lantz, Björn (Department of Business Administration, School of Economics and Commercial Law, Göteborg University)
Abstract
The Swedish Energy Agency is currently developing a performance assessment model for grid companies. The model relates total revenue to a standard cost based on a fictitious grid. This paper discusses a major theoretical disadvantage of this regulation principle, i.e. that the short and long term perspective is mixed. The result may be that a regulated actor compensates short term inefficiency with long term inefficiency. By measuring short and long term efficiency separately, this paper shows how this disadvantage easily can be eliminated.
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Publisher Info
Paper provided by Göteborg University, Department of Business Administration in its series FE rapport with number
2003-398.